The Proliferation PrimerInternational Security,
Proliferation, and Federal Services Subcommittee
United States Senate Committee on Governmental Affairs
A Majority Report -
January 1998

China

China is the principal supplier of weapons of mass
destruction and missile technology to the world, 1 and U. S.
government efforts to turn Beijing against international
proliferation have met with little success.

Since taking office in 1993, the Clinton Administration
has engaged in numerous discussions with senior
Chinese officials to persuade them to adhere to international
nonproliferation norms. The Administration has
also agreed to implement a nuclear cooperation agreement
that was reached with China in 1985 for a Chinese
pledge of no new Iranian nuclear sales and an assurance
to adhere to its pledge of nonassistance to nuclear facilities
not under International Atomic Energy Agency
(IAEA) safeguards in Pakistan and other nations. But
there has been a reluctance to impose sanctions under
several U. S. laws that require them when supported by
fact.

Several U. S. Senators have criticized the failure of
our government policies and statutes to produce results. 2
Both the Chairman and ranking minority member of this
subcommittee, Senator Thad Cochran and Senator Carl
Levin, have expressed concerns that past responses by the
Administration have been ineffective, 3 and Senator Ri-chard
Lugar has said, "[ t] he Administration is showing a
poverty of imagination in its responses to the Chinese." 4

Transfer of M- 11 Missiles to Pakistan

Since the early days of this decade, M- 11 short- range
ballistic missile (SRBM) and production technology trans-fers
from China to Pakistan have been a popular press
topic. Press reports on Chinese sales of M- 11 missiles to
Pakistan surfaced in the Wall Street Journal in April of
1991. 5 Later that same month the Washington Post re-ported
that U. S. intelligence agencies had spotted a num-ber
of launch vehicles for the M- 11 in Pakistan. 6 The M-11
is a modern, solid- fuel, surface- to- surface missile more
accurate, mobile, and easier to fire than the Scuds used
by Iraq in the Gulf War. Its presence in Pakistan along
with its production technology is problematic as it can
be armed with nuclear warheads. 7

This is one of two China proliferation cases where
U. S. sanctions have been imposed, in June of 1991 and
again in August of 1993. 8 In both instances, M- 11- re-lated
sanctions were later waived, in March of 1992 and
October of 1994, respectively, after Chinese promises to
adhere to the Missile Technology Control Regime
(MTCR). The MTCR is a voluntary arrangement under
which the 29 member nations agree to restrict exports of
ballistic missiles capable of carrying a payload of at least
500 kilograms to a range of at least 300 kilometers, as
well as key missile components and technology, to non-members
of the regime. It contains no sanctions mecha-nism
even for violators who are members.

Subsequent to the Wall Street Journal and Washington
Post reports, the Bush Administration imposed sanctions
effective in June of 1991 on two government- owned Chi-nese
companies: the China Great Wall Industry Corpo-ration
(China's satellite launch company) and the China
Precision Machinery Import- Export Corporation, which
produces the missile. The sanctions denied licenses for
the export of U. S. satellites, missile technology and equip-ment,
and high- speed computers to China.

Secretary of State James Baker went to China in
November of 1991 to resolve proliferation problems,
among other issues. During the visit Chinese officials
agreed to abide by the MTCR guidelines, and later sent
this commitment to the United States in writing.

In return, the U. S. waived sanctions in March of
1992. 9 Nine months after the waiver, the Los Angeles Times
reported China's violation of the commitment. 10 Its De-cember
4, 1992 article reported that, according to un-named
U. S. intelligence officials, China during the pre-vious
two weeks had delivered about two dozen M- 11's
to Pakistan through the port of Karachi. The former Pa-kistani
Chief of Army Staff, Mirza Aslam Beg, also ad-mitted
to Pakistan's purchase of M- 11's from China, but
said the missiles were not nuclear capable. 11

Citing a growing body of evidence, in August of 1993
the Clinton Administration imposed sanctions on
Pakistan's Ministry of Defense and 11 Chinese defense
and aerospace entities for violations of Category 2 of the
MTCR. 12 Category 1 covers transfers of complete mis-sile
systems, key components such as complete missile
stages, and some production equipment, while Category
2 regulates transfers of specific missile components and
dual- use goods used to produce missiles.

Shortly after the imposition of sanctions, the Wash-ington
Times quoted State Department and intelligence
sources as saying that despite "... overwhelming intelli-gence
evidence that China in November of 1992 shipped
Pakistan key components of its M- 11 missile" -- an
MTCR Category 1 violation -- Secretary of State Chris-topher
decided China had only committed a Category 2
violation and imposed the mildest form of sanctions pos-sible.
Under Secretary of State Lynn Davis defended the
decision, saying the U. S. did not have conclusive evidence
Pakistan had received complete M- 11's. 13

In October of 1994 the U. S. waived these sanctions,
too, in return for another Chinese promise not to export
"ground- to- ground missiles" which are "inherently ca-pable"
of delivering at least 500 kilograms to at least 300
kilometers. China and the U. S. also reaffirmed their com-mitments
to the "guidelines and parameters of the
MTCR," although America's commitment to the MTCR
was never in question. 14

Since the waiver, a steady stream of press reports have
disclosed intelligence information describing Chinese
transfers of M- 11's and continued assistance to Pakistan.
The Washington Post reported that satellite reconnaissance
photographs, intercepted communications, and human
intelligence reports suggest that Pakistan has had more
than 30 M- 11's since November of 1992. 15

The M- 11's are reportedly stored at Pakistan's
Sargodha Air Force Base west of Lahore, where the Paki-stani
military has constructed storage sheds for the mis-siles
and mobile launchers, as well as related maintenance
facilities and housing for launch crews. 16 Soldiers have
also been sighted practicing simulated launches with ad-vice
from visiting Chinese experts. 17

The Post reported in June of 1996 that all U. S. intel-ligence
agencies believe with "high confidence" that Pa-kistan
has obtained M- 11 missiles and that Islamabad
had probably finished developing nuclear warheads for
them. 18 An August of 1996 Washington Post article further disclosed a classified National Intelligence Estimate
concluded Pakistan was capable of an M- 11 launch within
48 hours. It also confirmed Pakistan was constructing a
factory to produce complete M- 11's or their major com-ponents
from Chinese- supplied blueprints and equip-ment. 19
According to the Washington Times, evidence of
M- 11's in Pakistan includes photographs of missile can-isters.
Yet the State Department, noting the presence of
specifically designed M- 11 canisters, ruled there was no
proof they held M- 11's. 20

Nuclear Cooperation with Pakistan

China's ballistic missile trade with Pakistan is only
one element of a broader relationship with Islamabad,
which also includes a wide range of nuclear assistance
since at least the early 1980's. This assistance reportedly
includes aiding with construction of a research reactor,
the provision of the design for a 25- kiloton implosion
device, and enough weapon- grade uranium for two
nuclear weapons. 21 Immediately before acceding to the
Nuclear Nonproliferation Treaty (NPT) in 1992, China
concluded a $500 million deal to construct a 300 mega-watt
nuclear reactor in Chasma, Pakistan.

The NPT prohibits exports of nuclear materials, non-nuclear
equipment, or materials "... especially designed or
prepared for use in..." producing nuclear materials to
unsafeguarded facilities in non- nuclear weapon states. 22
Pakistan has agreed to place the Chasma facility under
those safeguards, but has refused to accept IAEA full- scope
safeguards of its entire nuclear program. Although China
acceded to the NPT in 1992, it has refused to join the
Nuclear Suppliers Group (NSG), the voluntary, multi-lateral
31 nation effort to harmonize and strengthen ex-port
controls of nuclear suppliers. Members of the NSG
agree to restrict exports of dual- use and specially designed
and prepared nuclear equipment and facilities to only
those nations which accept IAEA monitoring of all facili-ties
and nuclear materials.

China announced in September of 1997 its imple-mentation
of an export licence system for specialized
nuclear equipment, as well as its intent to regulate ex-ports
of dual- use goods. According to Chinese Ambassa-dor
Li Changhe, these dual- use export regulations will be
in place by mid- 1998. 23 Establishment of an export con-trol
system and membership in the Zangger Committee
are two of five conditions the Clinton Administration
has placed on implementation of the 1985 U. S.- China
Nuclear Cooperation Agreement. 24 Although Beijing has
refused to join the NSG, it joined the Zangger Commit-tee
as a full member in October of 1997. 25 The differ-ences
between the NSG and Zangger are important.

While the Zangger Committee is similar to the NSG in
restricting exports of nuclear and dual- use equipment, it
allows exports to any facility under IAEA safeguards, even
in countries with unsafeguarded nuclear facilities. The
NSG is more restrictive because it requires that all nuclear
facilities in the recipient country be under IAEA safe-guards.
It is noteworthy that China refuses to require its
nuclear customers to accept these
full- scope safeguards.

While not a declared nuclear
state, Pakistan is a generally ac-knowledged
possessor of nuclear
weapons. In 1992, Foreign Secre-tary
Shahryar Khan was inter-viewed
by the Washington Post and
acknowledged Islamabad had the
components and know- how to as-semble
at least one nuclear explo-sive
"device," the first public con-firmation
of the extent of Pakistan's
nuclear program by a Pakistani
official. 26

During the interview, which
he said was intended to set the
record straight and identify the
barriers to resumption of U. S. aid, Khan said his country
had "... elements which, if put together, would become a
device." 27 He confirmed that these elements included
weapon "cores" made from highly enriched uranium, a
fissile material used in nuclear weapons.

Only a month before the Khan revelations, CIA Di-rector
Robert Gates had given a detailed public descrip-tion
of the Pakistani nuclear program, testifying, "... we
have no reason to believe that either India or Pakistan
maintains assembled or deployed nuclear bombs. But
such weapons could be assembled quickly, and both coun-tries
have combat aircraft that could be modified to de-liver
them in a crisis." 28 While Khan, in his Post inter-view,
professed ignorance as to the number of nuclear
devices his country could assemble from existing components, the Los Angeles Times cited a U. S. intelligence as-sessment
concluding Pakistan then had enough material
to make up to 10 nuclear weapons. 29

China has helped Pakistan's nuclear program in other
ways as well. In early 1996, the Clinton Administration
evaluated intelligence reports indicating China had sup-plied
ring magnets to a Pakistani nuclear facility, appar-ently
in violation of the NPT.

On February 5, 1996, the Washington Times cited in-telligence
reports indicating that China had transferred
5,000 ring magnets to the A. Q. Khan Research Labora-tory
in Kahuta, Pakistan. Intelli-gence
experts were said to believe
the magnets were for special sus-pension
bearings at the top of a
rotating cylinder in gas centrifuges
used exclusively for uranium en-richment. 30
The facility in
Kahuta, named after the father of
Pakistan's nuclear weapons pro-gram,
is not under IAEA safe-guards. 31

Three months later the New
York Times followed up with a
story dating the shipment as later
than June of 1994, and pricing it
at $70,000. 32 The state- owned ex-porter,
the China Nuclear Energy
Industry Corporation, is a wholly-owned
subsidiary of the China
National Nuclear Corporation, a firm under the direct
control of the State Council, whose head is China's Pre-mier. 33

On May 11, 1996, the State Department announced
sanctions would not be levied against China or Pakistan
for the ring magnet transfer, citing a new agreement un-der
which Beijing agreed not to assist unsafeguarded
nuclear facilities. 34 In testimony before the Senate, Deputy
Assistant Secretary of State for Nonproliferation Robert
Einhorn said the Administration was unable to determine
that China's senior- most leaders had approved the sale.
Mr. Einhorn added the Administration was therefore
unable to make a finding the sale required sanctions un-der
U. S. law, since it was unable to conclude that it con-stituted
"... a willful aiding or abetting of Pakistan's
unsafeguarded nuclear program by the government of
China." 35 The China Nuclear Energy Industry Corporation
is, however, owned by the Chinese government.

According to the
Washington Times,
evidence of M- 11's in
Pakistan includes
photographs of missile
canisters. Yet the State
Department, noting the
presence of specifically
designed M- 11 canisters,
ruled there was no proof
they held M- 11's.

President Clinton, in a press conference only a few
weeks later, seemed to contradict Mr. Einhorn when he
said, "I would remind you that when we had clear evi-dence
that China was providing ring magnets to Pakistan
in ways that we thought were plainly violative of our law
and our national interest, we dealt with them about that
and were satisfied. I think it's fair to say that on these
issues, we will make appropriate determinations and take
appropriate action." 36

In addition to being "plainly violative" of U. S. law,
the ring magnet sale also violated the NPT. Professor Gary
Milhollin, Director of the Wisconsin Project on Nuclear
Arms Control, explained: "These [ring magnets] are spe-cialized
items. We are not talking about dual- use equip-ment.
We are talking about magnets that are made spe-cifically
to go into centrifuges that make enriched uranium
for bombs. Those were sold by an arm of the China Na-tional
Nuclear Corporation, which is an arm of the Chi-nese
government. This was a sale by a Chinese govern-ment
organization directly to a secret nuclear weapon-making
facility in Pakistan of items that were specifically
designed to help make nuclear weapon material. In my
opinion, it violated China's pledge under the Nuclear Non-proliferation
Treaty, which China signed in 1992. The
treaty says that if you export something like that, you have
to export it with international inspection. China did not." 37

In testimony to the House International Relations
Committee in June of 1996, Under Secretary of State
Lynn Davis made a similar assessment, saying China's ring
magnet sale was "... not consistent with their obligations
as a party to the Nonproliferation Treaty." 38 Furthermore,
the 1997 Defense Authorization Act (public law 104- 201)
found the Chinese company involved in this sale "... has
knowingly transferred specially designed ring magnets to
an unsafeguarded uranium enrichment facility in the Is-lamic
Republic of Pakistan," and that the magnets are
controlled by the NSG "... as a component of magnetic
suspension bearings which are to be exported only to
countries that have safeguards of the IAEA over all of
their nuclear materials." 39

Mr. Einhorn testified that the Administration believed
China had complied with its latest nuclear nonprolifera-tion
commitment, and while the U. S. had "... raised con-cerns
about certain activities, we have no basis to con-clude
that China has acted inconsistently with its May
11 undertaking [not to assist unsafeguarded nuclear fa-cilities]." 40
Reports, however, have surfaced over the past
year suggesting Beijing continues to equip and assist
Pakistan's nuclear program.

On October 9, 1996, the Washington Times quoted a
CIA report of September 14, 1996, describing the Chi-nese
sale of a "special industrial furnace and high- tech
diagnostic equipment" to Pakistan. The furnace and di-agnostic
equipment are dual- use items useable in melt-ing
plutonium and uranium for nuclear weapons.

The Times also disclosed a State Department diplo-matic
note to China protesting the sale of the equipment
to "unsafeguarded nuclear facilities in Pakistan." 41 The
CIA report concluded the sale was probably arranged by
the China Nuclear Energy Industry Corporation, the ven-dor
of ring magnets to Pakistan, and that senior- level
government approval was most likely needed for the trans-action
to have occurred.

The Washington Post disclosed on October 10, 1996,
China's response to the American complaint. The equip-ment,
it explained, was delivered in late 1995 or early
1996, before their pledge not to assist unsafeguarded fa-cilities.
Quoting unnamed U. S. officials, the Post said
the intelligence community had confirmed this account
and added the equipment was apparently delivered to a
nuclear reactor under construction by Pakistan at
Khushab, which is also not under IAEA safeguards. 42
While it appears this transfer occurred prior to May of
1996 and therefore does not constitute a violation of
China's May 11, 1996 nonproliferation pledge, it is an-other
example of China's willingness to engage in nuclear
proliferation in violation of its NPT obligations.

Even the Arms Control and Disarmament Agency's
annual report to Congress did not state China had fully
complied with its May 11, 1996 agreement not to pro-vide
nuclear assistance to unsafeguarded facilities. In-stead,
it noted that while the Administration could not
yet stipulate a violation, "... questions remain about con-tacts
between Chinese entities and elements associated
with Pakistan's nuclear weapons program." 43

Sale of Anti- Ship Cruise Missiles to Iran

Another Chinese sale to Iran, this time of an advanced
conventional weapon system, the C- 802 anti- ship cruise
missile, poses a threat to U. S. forces in the Persian Gulf.
The missile has a range of 120 kilometers with a 165
kilogram warhead and is especially lethal due to its over-the-
horizon capability. 44 In 1987 a single Exocet cruise
missile killed 37 sailors on the USS Stark.

Iran's possession of the missile was first disclosed in
January of 1996 by Vice Admiral Scott Redd, then- com-mander
of the U. S. Fifth Fleet. Redd said the C- 802
gave the Iranian military increased firepower and repre-sented
a new dimension to the threat faced by the U. S.
Navy, stating, "[ i] t used to be we just had to worry about
land- based cruise missiles. Now they have the potential
to have that throughout the Gulf mounted on ships." 45
In addition to land and sea- based platforms, Iran can also
launch the C- 802 from air- based platforms. 46

The latest open source estimate is that Iran has about
40 C- 802's, but this was reported in March of 1996. 47 It
is unclear from open sources how many additional C-802's
China has supplied since then.

Late in 1995, according to the Washington Times,
Pentagon officials recommended declaration of a Chinese
violation of the Gore- McCain Iran- Iraq Arms Nonpro-liferation
Act of 1992, which requires sanctions for the
transfer to either country of "... destabilizing numbers and
types of advanced conventional weapons..." Yet State De-partment
officials, including Under Secretary Lynn Davis,
opposed invocation of sanctions to avoid damaging rela-tions
with China. 48

In Senate testimony, Mr. Einhorn acknowledged the
transaction, saying, "... the question of whether China
transferred the C- 802 anti- ship cruise missiles to Iran is
not in doubt." 49 He further noted, "[ s] uch missiles in-crease
China's maritime advantage over other Gulf states,
they put commercial shipping at risk, and they pose a
new threat to U. S. forces operating in the region." 50

In its annual report, Worldwide Maritime Challenges,
published in March 1997, the Office of Naval Intelli-gence
discussed the implications of Iran's acquisition of
C- 802 missiles and Houdong patrol boats, stating,
"... equipped to carry the Chinese C- 802 antiship cruise
missile, the Houdongs pose a significant threat to ship-ping
in the Persian Gulf." 51 The report added that the C-802
missiles, in concert with Kilo submarines acquired
from Russia, provide Iran "... with a capability to threaten
naval forces and merchant shipping in the Persian Gulf
and affect passage through the Strait of Hormuz. Iran's
ongoing acquisitions of conventional arms and weapons
of mass destruction (WMD) contribute to continual in-stability
in the Persian Gulf." 52

Despite his concern over Iran's new missiles, Mr.
Einhorn defended the Administration's anti- sanction po-sition,
claiming no violation of Gore- McCain given the
lack of "... destabilizing numbers and types..." of missiles. 53
Former U. S. Ambassador to China James Lilly disagreed,
testifying there was "... no question that the sale of these
missiles is under central control and it violates our law." 54
He went on to note that Iran's possession of C- 802 mis-siles
poses a "... clear and present danger to the United
States fleet." 55 Ambassador Lilley also decried Adminis-tration
inaction, saying of its response, "[ t] ell that to our
sailors and airmen in the Persian Gulf who are aware the
Iranians now have facing our ships [C- 802] launch ve-hicles
for mobility and numerous caves for shelter and
concealment along the coast." 56

Prior to Chinese President Jiang Zemin's 1997 visit
to the United States, press reports indicated Foreign Min-ister
Qian Qichen had assured Secretary Albright Beijing
would stop cruise missile sales to Iran. But the Adminis-tration
has refused to confirm these reports. 57 On Octo-ber
18, 1997, State Department spokesman James Rubin
said, "Secretary Albright has raised in all her meetings
with the Chinese foreign minister our deep concerns about
the sale of conventional weapons and cruise missiles to
Iran. I have no comment on his response." 58

Chemical and Biological Sales to Iran

Chinese sales of equipment and precursor chemicals
to Iran for their chemical and biological warfare programs
have attracted considerable press coverage. In March of
1996, the Washington Post reported that Chinese compa-nies
were providing Iran with virtually complete factories
suited for making chemical weapons (CW). 59 For more
than a year, the U. S. reportedly monitored a steady flow
of Chinese chemical- related equipment to Iran, where it
was installed in factories ostensibly for commercial- use
chemicals. The equipment included glass- lined vessels
suited for mixing caustic CW precursors and air filtra-tion
equipment. Iran reportedly also purchased Chinese
technology to manufacture these and other items. The
Post reported that unnamed Administration officials said
Chinese firms had sold precursor chemicals to Iranian
organizations affiliated with the military or the Revolu-tionary
Guards, and the U. S. had "clear indicators" the
chemicals were not for legitimate products. 60 China also
delivered nearly 400 metric tons of chemicals -- includ-ing
carbon sulfide used in the production of nerve agents
-- to Iran in mid- 1996, according to the Washington
Times. 61

On January 24, 1997, the
Washington Times reported that
in written responses to the Sen-ate
Foreign Relations Commit-tee,
Secretary Albright indi-cated
Chinese companies sold
equipment to Iran that could
boost its biological weapons
(BW) program. An unnamed
U. S. intelligence official was
quoted to the effect that the
transfer involved equipment
and vaccines with applications
for civilian medical research as
well as biological weapons. 62

According to the Wall
Street Journal, Iran has the largest
CW stockpile in the Third World. 63 In 1995, Gordon
Oehler, Director of the CIA's Nonproliferation Center,
testified to the Senate that, "Tehran continues to upgrade
and expand" its ability to produce and use CW
and "is spending large sums of money on long- term capi-tal
improvements... which tells us that Tehran fully in-tends
to maintain a chemical weapons capability well into
the future." 64 In 1996, a Defense Department study con-cluded
Iran also has a large BW program which began in
the early 1980's and is capable of producing many differ-ent
biological weapons. 65

Although the Administration praised China for sign-ing
the Chemical Weapons Convention in 1993 and for-mally
ratifying the treaty on May 4, 1997, it imposed
sanctions in May of 1997 on two Chinese companies,
five Chinese executives, and a Hong Kong firm for know-ingly
assisting Iran's chemical weapons program. The
Chinese companies were the Nanjing Chemical Indus-tries
Group and an affiliated trading company, the Jiangsu
Yongli Chemical Engineering and Technology Import/
Export Corporation. 66 According to the New York Times,
the five executives worked for other firms, but acted indi-vidually
to sell CW- related items to Iran. 67 The Hong
Kong company, Cheong Yee Ltd., was reportedly penal-ized
for facilitating transactions between Chinese com-panies
and Iranian authorities.

The Chinese companies, now banned from trading
with the United States, are not
state- owned, although it is
unclear if their executives have
hidden relationships with the
Chinese government or mili-tary,
as many Chinese firms
do. The sanctioned compa-nies
reportedly conduct busi-ness
worth about $2 million
a year with the U. S. Since this
is but a fraction of their total
sales, these sanctions are
hardly onerous.

The sanctions were the
first on Chinese entities for
CW- related transfers and were
imposed under the Chemical
and Biological Weapons Con-trol
and Warfare Elimination
Act of 1991, a law forbidding companies from exporting
a variety of chemicals and equipment to countries identi-fied
by the U. S. as state sponsors of terrorism. Under
this law, the sanctions are imposed for one year, after which
the Administration can either waive or continue them.

Sales of Missile Technology to Iran

During the last few years several published reports
have described transfers of Chinese missile technology to
Iran, MTCR pledges notwithstanding. Citing a CIA re-port,
on June 23, 1995, the New York Times reported de-livery
of "dozens, perhaps hundreds, of missile guidance
systems and computerized machine tools to Iran." 68 These
components, it said, could improve the accuracy of North
Korean- supplied Scuds and enable it to build more on its
own. The article quoted John Holum, Director of the
Arms Control and Disarmament Agency: "There are sub-stantial
indications of continued missile- related transac-tions
to [Iran]," and "... we are in a position where we
have to consider the question of sanctions." 69

... the Subcommittee's April
10, 1997 hearing on Chinese
proliferation sheds light on
"... an area where I think we
have not lived up fully to our
own domestic requirements in
terms of the imposition of
sanctions where evidence is
plenty clear, or clear enough
for me, at least."

Senator Carl Levin

In November of 1996, the Washington Times disclosed
a CIA report titled "Arms Transfers to State Sponsors of
Terrorism" which said the China Precision Engineering
Institute had agreed to sell Iran's Defense Industries Or-ganization
gyroscopes, accelerometers, and test equip-ment,
for building and testing missile guidance compo-nents. 70

In the wake of the initial New York Times article, State
Department spokesman Nicholas Burns said the U. S. was
looking closely at the allegations, but had not determined
whether China had violated previous commitments or
U. S. law. 71 In written statements to Representative Gerald
Solomon in June of 1997, seven months after Mr. Burns'
remarks and two years after Director Holum's, Secretary
of State Albright indicated the Administration was still
"reviewing carefully" reports of missile- technology trans-fers
to Iran, but had not decided whether the sales met
the legal threshold requiring sanctions.

On June 17, 1997, the Washington Times revealed that
according to a classified Pentagon intelligence report, Iran,
with Chinese assistance, was developing a new short- range
ballistic missile. 72 The joint program reportedly involves
the development of the NP- 110 solid- propellant missile
with a range of 105 miles. According to the Times, "Ira-nian
missile technicians traveled to China [in May of
1997] to watch a ground test of a 450 mm- diameter rocket
motor to be used in the NP- 110." In addition, China
reportedly agreed to sell Iran X- ray equipment to study
missile casings and to check for defects in solid- propel-lant,
and has supplied telemetry equipment which sends
and collects missile guidance data during flight tests. 73

Finally, an unclassified report to Congress from the
Director of Central Intelligence, reflecting the consensus
view among U. S. intelligence agencies, noted "[ t] he Chi-nese
provided a tremendous variety of assistance to both
Iran's and Pakistan's ballistic missile programs [in 1996]." 74

In testimony in April of 1997, Mr. Einhorn said while
the Administration did not believe China had exported
complete missiles since 1994, "... concerns about transfers of missile components and missile technology per-sist,
raising serious question about the nature of China's
commitment to abide by the MTCR guidelines. At a
minimum, the Chinese do not appear to interpret their
responsibilities under the guidelines as restrictively as we
do, or as other MTCR members do." 75

Nuclear Cooperation with Iran

As any nuclear technology can be used to build sci-entific
and technical infrastructure for nuclear weapons
programs, the U. S. has urged China and other nations
not to sell it to Iran. But the U. S. response is compli-cated
by the fact that "peaceful" nuclear energy projects
are allowed under the NPT, to which both China and
Iran are parties. Nuclear weapon program advances by
Iraq and North Korea, both NPT members, raise serious
questions about the treaty's effectiveness.

For years, despite U. S. concerns, China has contin-ued
its nuclear cooperation with Iran. In September of
1992, China and Iran finalized an agreement on "nuclear
energy" cooperation when President Rafsanjani visited
Beijing accompanied by top- level military and atomic
energy officials. China reportedly agreed to build two
300 megawatt nuclear reactors in about ten years in Iran. 76
This deal, however, appears to be on hold. In April of
1997, Deputy Assistant Secretary Einhorn testified, "[ i] n
1995, China suspended the sale of two nuclear power
reactors to Iran, probably as a result of siting and financ-ing
difficulties." 77

There are other questionable Chinese nuclear deals
with Iran. The China Nuclear Energy Industry Corpo-ration
has reportedly agreed to sell Iran a facility to con-vert
uranium ore into uranium hexaflouride gas, which
can be enriched to the weapons- grade level. 78 In Senate
testimony, Professor Gary Milhollin criticized Chinese
leaders for the sale of this facility to Iran, stating, "[ t] here
is no peaceful use for enriched uranium in Iran. Enriched
uranium is used to fuel reactors, but the only reactors in
Iran that could use such fuel are being supplied by Rus-sia,
which is also supplying their fuel. The conclusion
has to be that Iran wants to use this plant to make atomic
bombs. The fact that China is even considering this deal
shows that China is quite ready to put nuclear weapon-making
capability into the hands of what the United States
regards as a terrorist nation." 79

China has reportedly also agreed to sell Iran a zirconium
production plant and a zero- power research reac-tor. 80
The zirconium plant is a key nuclear fuel cycle fa-cility,
used to produce a special metal sheath, zirconium
cladding, for nuclear fuel rods used in reactors. Zirco-nium
is listed as a controlled item by the Nuclear Suppli-ers
Group. U. S. export control law bans sales from the
United States without a validated license, and U. S. Cus-toms
agents have been involved in enforcement actions
to prevent this from occurring. The zero- power research
reactor, under construction for several years at Iran's
Esfehan nuclear center, will not generate power. While
the reactor will not use enriched uranium or produce sig-nificant
amounts of plutonium, it will enable Iran to con-duct
nuclear research and train technicians. 81

According to Administra-tion
officials, during October
1997 summit preparations,
Beijing agreed to cancel the ura-nium
conversion facility con-tract
and halt future nuclear
sales to Iran in exchange for an
American Presidential certifica-tion
permitting implementa-tion
of the 1985 U. S.- China
Nuclear Cooperation Agree-ment. 82
China reportedly
agreed to make public state-ments
and provide private writ-ten
assurances it would not en-gage
in future nuclear sales to
Iran. 83

Chinese officials, however, were unwilling to cancel
contracts for the zero- power reactor or the zirconium pro-duction
plant with Tehran. During President Jiang's visit
to Los Angeles, Foreign Ministry spokesman Shen
Guofang even denied Chinese nuclear cooperation with
Iran and called assurances to the U. S. unnecessary. "The
question of assurance does not exist," said Shen. "China
and Iran currently do not have any nuclear cooperation." 84

Conclusion

These case studies explain China's reputation as the
world's foremost proliferator of weapons of mass destruc-tion
and missile technology. Efforts by the Clinton Ad-ministration
have failed to halt China's dangerous sales
of sensitive technology. The Administration has inter-preted
its obligations under the law very narrowly. Its
reliance on more pledges from the Chinese at the Octo-ber
summit reminds us of Samuel Johnson's observation
about his friend's remarriage as "the triumph of hope over
experience."

The transfer of M- 11's to Pakistan illustrates China's
violation of its nonproliferation promises. Press evidence,
especially the photographs of M- 11 missile canisters --
canisters specifically designed to transport M- 11's -- is
compelling. U. S. intelligence agencies are confident Pa-kistan
has obtained M- 11's from China, and in August
of 1996, a National Intelligence Estimate (NIE) -- representing
the consensus of the intelligence community
-- reportedly concluded that
Chinese missile assistance was
continuing. 85 Worse, the NIE
concluded China is helping to
construct an M- 11 factory in
Pakistan, making future M- 11
missile transfers unnecessary. 86

Despite the evidential pat-tern,
the Administration has not
imposed sanctions. In Senate
testimony, Mr. Einhorn said
sanctions had not been invoked
on China for the sale of M- 11
missiles to China "... because our
level of confidence is not suffi-cient
to take a decision that has
very far- reaching consequences." 87 But the Administra-tion
appears to have purposely set a standard of evidence
so high as to be unattainable. Professor Milhollin sug-gested
as much when he said, "I think the State Depart-ment
just continues to raise the level over which you have
to jump higher and higher as the evidence comes in so
that sanctions will never have to be applied and the en-gagement
policy can simply be continued. The effect is
to really nullify the act of Congress that imposes sanc-tions,
because unless the State Department is willing to
go forward in good faith and complete the administra-tive
process, then the law cannot take any effect." 88

The ring magnet case is an example of an inventive
legal interpretation to avoid sanctions under U. S. prolif-eration
laws. Mr. Einhorn's suggestion of the absence of
approval of China's most senior leaders required for a finding of "... a willful aiding or abetting of Pakistan's
unsafeguarded nuclear program by the government of
China" shows how high the level of proof has been raised
by the Clinton Administration. 89 While specific senior
leaders in Beijing may or may not have been aware of the
transaction, a Chinese government entity, the China
Nuclear Energy Industry Corporation, clearly was.

The Administration's
reliance on more pledges
from the Chinese at the
October summit reminds us
of Samuel Johnson's
observation about his
friend's remarriage as "the
triumph of hope over
experience."

The Administration's handling of the ring magnet
problem raises two important issues that are threaded
throughout all U. S. proliferation encounters with China.
First, the Administration claims China's proliferation record
remains problematic, but has improved in recent years.
Beijing, however, steadfastly denies that a proliferation
problem ever existed each time the United States announces
resolution of a proliferation dispute. For instance, in Feb-ruary
of 1996 a Chinese Foreign Ministry spokesman
stated, "China is a responsible country. We have not trans-ferred,
nor will we transfer to any country, equipment or
technologies used in manufacturing nuclear weapons." 90

Secondly, Administration officials often claim
China has provided clear assurances in private, but these
statements are usually contradicted by Chinese public
statements. After the "resolution" of the ring magnet dis-pute,
Secretary of State Warren Christopher testified to
Congress, "[ l] ast week, we reached an understanding with
China that it will no longer provide assistance to
unsafeguarded programs. Senior Chinese officials have
explicitly confirmed our understanding that the Chinese
policy of not assisting unsafeguarded nuclear facilities
would prevent future sales, future transfers of ring mag-nets." 91

China, however, has never publicly acknowledged
transferring ring magnets to Pakistan, and on the very same
day as Christopher's testimony, China's Foreign Ministry
spokesman said, "[ b] eing a signatory of the Nuclear Non-Proliferation
Treaty, China strictly abides by its treaty com-mitments
and has never engaged in any activities in viola-tion
of its commitments. China's position of opposing
nuclear weapons proliferation is constant and unambigu-ous.
China will, as usual, continue to honor its interna-tional
commitments and play a positive role in maintain-ing
regional and world peace and stability." 92 These expe-riences
lead us to question whether, in Secretary Albright's
words, the Chinese "... have changed their modus operandi." 93

President Clinton's statement at a June 1997 press
conference that the ring magnet sale was "plainly violative"
of U. S. law is an accurate interpretation of the stat-ute.
But, if the ring magnet sale was "plainly violative" of
U. S. law, where are President Clinton's "appropriate de-terminations"
and "appropriate action[ s]"?

The advanced cruise missiles sold to Iran have in-creased
Iran's maritime advantage over its neighbors and
have increased the dangers to U. S. military forces in the
region. 94 The refusal of the Administration to respond
with sanctions on China for putting U. S. troops at risk
from C- 802's led the U. S. Senate to adopt a sense of the
Senate resolution in protest.

In June of 1997, it passed an amendment by a vote
of 96 to 0, saying, "[ t] he delivery of cruise missiles to
Iran is a violation of the Iran- Iraq Arms Non- Prolifera-tion
Act of 1992 (50 U. S. C. 1701). It is the sense of the
Senate to urge the Clinton Administration to enforce the
provisions of the [Act] with respect to the acquisition by
Iran of C- 802 model cruise missiles." 95

Despite the Senate position, the Administration con-tinues
to maintain that C-802 sales are not "destabiliz-ing."
During testimony to the Senate Foreign Relations
Committee on September 17, 1997, Assistant Secretary
of State for East Asian and Pacific Affairs Stanley Roth
claimed the C-802 sale "... does not have to be destabiliz-ing
if you define it as overturning the ability of the United
States to operate in the Persian Gulf. It hasn't done that." 96
Mr. Roth added, "... the U. S. Navy tells us that despite the
increased threat from the sale of cruise missiles, it can con-tinue
to operate and carry out its mission to the Persian
Gulf. And so even though [the Navy] is exceedingly un-happy
with this new development, it is not, on the face of
it, destabilizing at this point." 97 Such thinking makes un-imaginable
what the Administration might find sufficiently
destabilizing for sanctions under the Gore- McCain Act.

Another troubling characteristic of the
Administration's response is the strategy of delaying a for-mal
decision. When confronted with evidence of Chi-nese
proliferation, Administration officials will say: "We
take the allegations seriously, but a formal decision to im-pose
or waive sanctions is a serious step that must be care-fully
considered." Over two years ago, ACDA Director
Holum's reaction to "substantial indications" of Chinese
missile assistance to Iran was, "... we are in a position where
we have to consider the question of sanctions." 98 But, the
Administration has made no formal decision to impose
them, perhaps hoping Congress, if not the military, would
forget the problem.

In Senate testimony in April 1997, Professor
Milhollin highlighted the Administration's inaction, stat-ing,
"I am told that last fall, the Executive Branch fin-ished
a number of studies on China's missile and chemi-cal
exports to both Iran and Pakistan. The studies con-tained
the legal and factual analysis necessary to apply
sanctions, but the studies have lain dormant since then.
The State Department is now, in effect, choosing not to
complete the administrative process. So the result is that
the sanctions law is not achieving either deterrence or
punishment as Congress intended." 99

Senator Ted Stevens expressed frustration at the
Administration's unwillingness to implement the law, stat-ing,
"I am coming to the conclusion that maybe the Ad-ministration
is so narrowly interpreting our laws that we
would have the situation that if a country moved a missile
or a poison gas or bacterial warfare system piece by piece,
grain by grain, you could not do anything about it until all
the grains were there and then it would be a fait accompli." 100

Something can be done about these transfers, and
would be if the Administration did not refuse to take
actions required under U. S. law. This lack of action is
particularly troubling, as China's government knew of the
transfers of WMD and missile technology to Iran and
Pakistan and either approved the sales or refused to halt
them. Mr. Einhorn admitted as much, saying, "China's
problematic record on exports can largely be attributed
to conscious decisions by Chinese leaders to pursue
policies deemed to be in China's national interest. In
the case of Pakistan this has involved decisions to
bolster the defense capabilities of a close and long-
standing friend against the perceived threat from India.
In the case of Iran, there has probably been more
of a mixture of foreign policy and commercial motivations." 101

Occasionally the Administration does obey statutory
sanctions requirements, but only symbolically, as with the
de minimus sanctions imposed for the sale of chemical
weapons materials and technology to Iran. Those sanc-tions
were not applied to the Chinese government, but
only on a handful of Chinese individuals and companies.
That the actions met the bare requirements of U. S. law
considerably minimized their impact. The Washington
Post reported: "The sanctions announced yesterday will
have minimal economic effect on China, officials said,
because they are aimed at individuals and companies that
do little business with this country." 102

Secretary Albright defended the Administration's
decision not to sanction the Chinese government, saying
the U. S. had "... no evidence that the Chinese government
was involved" in the CW- related sales to Iran. 103 But
other Administration officials,
including Mr. Einhorn, readily
acknowledge the U. S. has, on
many occasions, raised concerns
about CW- related sales to Iran
with the Chinese government.
That government may or may
not have formally approved
chemical equipment sales to
Iran, but government officials
in Beijing knew of the transfers,
if only because of the concerns
expressed by U. S. officials. As
Mr. Einhorn said in Senate testimony,
China cannot take a
"see no evil, hear no evil approach"
to chemical exports; as
a minimum, this approach
should not be cost- free. 104

The imposition of sanctions should not be the first or
only weapon used against proliferation, but it should not
be allowed to rust from disuse. The United States can
selectively use sanctions either to halt these deadly sales or
at least raise costs to proliferators. On October 17, 1991,
then- Senator Al Gore spoke on the Senate floor of the need
for strong actions, such as sanctions, to combat prolifera-tion.
He urged governments around the world to make

sales of sensitive technologies "... high crimes under each
country's legal system, to devote the resources necessary to
find those who have violated those laws or who are con-spiring
to violate them, and to punish the violators so
heavily as to guarantee the personal ruin of those who are
responsible, and to easily threaten the destruction of any
enterprise so engaged." 105

Senator Stevens said at a Subcommittee hearing, "I
do not like to see charts like the one that we're looking at
that indicate that we have had
a series of instances and we
have had no sanctions, no
sanctions, no sanctions, no
sanctions. Then you had
sanctions and you lifted them
within nine months. What
does that say to China? It says
that our laws are immaterial,
really, in terms of our relationships." 106

If the United States does
not back its words with actions,
China and other suppliers
of weapons of mass destruction
technology and delivery
systems will view
American statements of concern
as meaningless rhetoric.
Senator Stevens went on to observe, "I do not see any
reason to be hasty in imposing sanctions. On the other
hand, it seems to me that our relationships will deteriorate
if we are not very strong in expressing our opinions
and fulfilling our commitments to one another." 107 Just
as sanctions cannot be the only tool for dealing with proliferation,
neither can high- level discussions.

" I am coming to the conclusion
that maybe the Administration
is so narrowly interpreting
our laws that we would have the
situation that if a country moved
a missile or a poison gas or bacterial
warfare system piece by
piece, grain by grain, you could
not do anything about it until all
the grains were there and then it
would be a fait accompli."

Ð Senator Ted Stevens

Implementation of U.S.-China Peaceful Nuclear Cooperation Agreement

During the October 1997 summit in Washington
with Chinese President Jiang Zemin, President
Clinton announced his intention to implement the
1985 U. S.- China Peaceful Nuclear Cooperation
Agreement. 108 The accord was negotiated and
signed during the Reagan Administration and
permits U. S. companies to export nuclear technology
to China. Its implementation stalled, however,
due to a condition included in the 1985 Joint
Resolution passed by Congress approving the
agreement which requires the President to certify
that China has taken steps "... represent[ ing]
sufficient progress toward terminating..." nuclear
weapon- related assistance to any nation other than
the five declared nuclear powers (i. e. Russia, China,
France, the U. K., and the U. S.) before the agree-ment
could take effect. No President has been able
to make this certification in the last 12 years.

The Clinton Administration puts forward five
actions by China justifying the certification
necessary to implement the 1985 agreement. But
Implementation of U. S.- China Peaceful Nuclear Cooperation Agreement
questions remain on whether the actions are as
significant as suggested.

Actions 1 and 2: Clear and unequivocal public
assurances that China will not provide nuclear
assistance to non- nuclear states, and private written
assurances that China will not engage in new
nuclear cooperation with Iran. Foreign Ministry
spokesman Guofang announced before President
Jiang left the United States there was no need to
provide assurances to the United States since
"China and Iran currently do not have any
nuclear cooperation," demonstrating that
Beijing has not complied with either of these
conditions. 109

Action 3: Beginning to put export controls in
place, including controls on dual- use items.
Chinese Ambassador Changhe stated at a
Zangger Committee meeting in October 1997
that, "[ r] elevant departments of China are
stepping up their efforts to complete the export
control regulations on the nuclear- related dual
use items. The regulations will be completed by
mid- 1998." 110 This is something Beijing could
do immediately if it chose.

ACDA's 1996 Annual Report to Congress states,
"... questions remain about contacts between
Chinese entities and elements associated with
Pakistan's nuclear weapons program," and the
recent report to Congress by the Director of
Central Intelligence says, "China also was the
primary source of nuclear- related equipment and
technology to Pakistan" in late 1996. 111

Action 5: Membership in the Zangger Committee.
China has complied with this condition, attend-ing
its first meeting as a full member of the
Zangger Committee on October 16, 1997.
China has not, however, joined the Nuclear
Suppliers Group (NSG), whose members adopt
far more stringent export controls. While
Zangger membership represents a slight step
forward, NSG membership would mean more.
Most other U. S. nuclear partners are members of
the NSG, and none of the countries that are
outside the NSG are of nuclear proliferation
concern. The standard should not be lower for
China.

During a summit- related Senate staff briefing, an
Administration official said, "the question is whether
they'll [the Chinese] live up to their assurances [on
nuclear nonproliferation]." 112 Representative Lee
Hamilton, the ranking member of the House
International Relations Committee, stated recently,
"[t]here is no question that Chinese behavior in non-
nuclear areas -- especially on missiles -- is far from
satisfactory. Much more progress is required and the
administration needs to press China hard." 113
Hamilton noted further, "China's overall nonprolif-eration
record of compliance leaves much to be
desired." 114 As long as the Administration's reaction
to China's proliferation is "it could be worse," the
United States can expect its continuation.

When the Administration announced it would
not impose sanctions on China for selling ring
magnets to Pakistan, a senior State Department
official told reporters the concession was warranted
partly because China had promised no future
transfers. 115 But when the Chinese government
released a statement about the resolution of the
dispute eight hours later, it was clear Beijing would
not go that far. The Chinese statement referred
neither to future sales of ring magnets, the heart of a
four month dispute, nor to any pledge by Beijing to
refrain from similar exports in the future. 116

According to a Washington Post article on May
14, 1996, "China had refused repeated U. S.
requests to make these pledges publicly. To cover
the defect, Washington devised an unusual diplo-matic
stratagem: U. S. officials would say what they
thought China meant to say in public, and the
absence of any public Chinese protest would be
taken as Beijing's assent." 117 China's refusal to give
clear assurances and to comply fully with its
commitments will remain routine as long as
breeched promises and vague statements are accepted.

ENDNOTES

2
U. S. Congress, Senate Governmental Affairs Subcommittee
on International Security, Proliferation, and Federal Services,
Hearing on April 10, 1997, China: Proliferation Case Studies, 105th
Cong., Sess. 1, 1997, p. 42. Hereafter cited as Hearing, China:
Proliferation Case Studies, 1997. As Senator Thad Cochran stated
during the hearing, "It is clear to me, and troubling at the same
time, that the Administration's efforts have been ineffective." He
further noted that China's sales of weapons of mass destruction and
advanced conventional weapons had "made this a more dangerous
world for us, particularly, and is a threat to the security of the
United States."

3 Ibid., p. 23. Senator Carl Levin summarized the
Administration's unmet legal obligations when he said during the
Subcommittee's April 10, 1997 hearing on Chinese proliferation
that it had shed light on "an area where I think we have not lived
up fully to our own domestic requirements in terms of the
imposition of sanctions where evidence is plenty clear, or clear
enough for me, at least."

46
General Peay, then commander of U. S. Central Command,
commented in an interview in January of 1997 that China had also
sold 20 Houdong fast- attack patrol boats, 15 of which are armed
with C- 802's to Iran. Bill Gertz, "U. S. Commander in Gulf Sees
Increased Threat from Iran," Washington Times, January 29, 1997,
p. A3. Ambassador Lilley testified at the Senate Governmental
Affairs Subcommittee on International Security, Proliferation, and
Federal Services April 10, 1997 hearing that Iran had also mounted
the C- 802's on highly mobile truck- mounted launchers which
could easily be concealed in caves. Hearing, China: Proliferation
Case Studies, p. 24. In addition, during a five- nation tour of the
Middle East in June of 1997, Defense Secretary William Cohen
disclosed that the Iranian Air Force had conducted test launches of
an air- launched version of the C- 802 and warned the Iranian
government not to consider disrupting seaborne trade in the
Persian Gulf, stating, "Iran's words and actions suggest that it wants
to be able to intimidate its neighbors and to interrupt commece in
the Gulf. The United States will not allow this to happen." Robert
Burns, "Defense Chief Warns Iran," Associated Press, June 18, 1997.

57 Steven Erlanger, "U. S. Says Chinese Will Stop Sending
Missiles To Iran; Nuclear Aid May End Too; Way Might Then Be
Cleared for Sale of American Atomic Technology to China," New
York Times, October 18, 1997, p. A1 and Laura Myers, "China
promises to halt missile sales to Iran, U. S. official says," Associated
Press, October 18, 1997.